Aegis Vopak IPO review (May apply)

•    The company is a JV between Aegis Logistics and Vopak India BV.
•    It is the largest Indian third-party owner and operator of tank storage terminals.
•    It currently manages around 25.53% of India’s third-party liquid storage capacities.
•    Its financial performance has seen turnaround and also indicates its future prospects going forward.
•    Based on recent financial data, the issue appears exorbitantly priced discounting all near term positives.
•    Cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Aegis Vopak Terminals Ltd. (AVTL) was established as a joint venture between Aegis Logistics Limited (“Aegis”) and Vopak India BV, a part of Royal Vopak (“Royal Vopak”). One of its Promoters, Aegis, is a listed Indian conglomerate providing sourcing, storage, distribution, storage and third-party logistics services in the oil, gas, and chemicals sector. Aegis is India’s largest third-party LPG handler and handles more than 20% of India’s LPG imports as of December 31, 2024. 

Further, as of December 31, 2024, Aegis operates a liquid terminal with a storage capacity of 275,000 cubic meters, and owns and operates a 21,000 MT cryogenic LPG terminal capable of handling a throughput of 1.5 million metric tons (“MMT”) per annum (“MMTPA”) in Mumbai, Maharashtra. (Source: CRISIL Report). Its other Promoter, Vopak India BV, is part of Royal Vopak, a listed company headquartered in the Netherlands and is among the world’s leading tank storage companies, with an experience of over 400 years in the storage industry. Royal Vopak has a network of 77 terminals in 23 countries with an aggregate storage capacity of approximately 35.40 million cubic meters as of December 31, 2024 along major trade routes. It is focused on storage and handling of gases such as LPG, in addition to ammonia, as well as liquid products such as crude oil, petroleum, oil and lubricants, chemicals and biofuels. (Source: CRISIL Report).

AVTL is the largest Indian third-party owner and operator of tank storage terminals for liquified petroleum gas (“LPG”) and liquid products in terms of storage capacity, as of December 31, 2024 (Source: CRISIL Report). It owns and operates a network of storage tank terminals having an aggregate storage capacity of approximately 1.50 million cubic meters for liquid products and 70,800 metric tons (“MT”) of static capacity for LPG as of December 31, 2024, and offer secure storage facilities and associated infrastructure for liquids such as petroleum, vegetable oil, lubricants, and various categories of chemicals and gases such as LPG (including propane and butane). It has the largest storage capacity in India’s LPG tank storage sector, contributing to approximately 11.50% of the total national static capacity, as of December 31, 2024 (Source: CRISIL Report). In terms of storage of liquid products, AVTL is the largest third-party tank storage company in India, contributing to approximately 25.53% of India’s third-party liquid storage capacity as of December 31, 2024 (Source: CRISIL Report). As of December 31, 2024, it has a diversified network of terminals spread strategically across five key ports in operation on the West and East coast of India. These key ports together handle approximately 23.00% of liquid and 61.00% of total LPG import volumes in India. (Source: CRISIL Report). At these terminals, it owns and operates facilities for different functions including product storage tanks, firefighting facilities, self-owned pipelines connected to jetty, ship loading and unloading infrastructure, as well as infrastructure for product evacuation by ship, rail, road and pipelines.

AVTL has been able to build relationships with a diverse range of customers, partially built on the foundation of its promoter, Aegis’, years of operations. Aegis has established long-standing relationships with several Indian and global customers in course of its operations of over five decades (Source: CRISIL Report). Consequently, it has been able to inherit these long-standing relationships to develop own customer base. Through its strategic locations, distinct from Aegis and complementing its offerings, the company has been able to procure business from Aegis’ customers, who it continues to service. As of December 31, 2024, it had a diversified customer base of over 400 customers including major national OMCs. The company enjoys repeat orders from customers to the tune of 92+% on an average. As of December 31, 2024, it had 444 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 119148936 fresh equity shares issue worth Rs. 2800.00 cr. (at the upper cap). The company has announced a price band of Rs. 223 – Rs. 235 per equity shares of Rs. 10 each. The issue opens for subscription on May 26, 2025, and will close on May 28, 2025. The minimum application to be made is for 63 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 10.75% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 2015.95 cr. for repayment/prepayment of certain borrowings, Rs. 671.30 cr. for capex on contracted acquisition of the cryogenic LPG terminal at Mangalore, and the rest for general corporate purposes. 

The company has allocated not less than 75% for QIBs, not more than 15% for HNIs and not more than 10% for Retail investors. The company reduced the size of the IPO from Rs. 3500 cr. to Rs. 2800 cr. 

The joint Book Running Lead Managers (BRLMs) to this issue are ICICI Securities Ltd., BNP Paribas, IIFL Capital Services Ltd., Jefferies India Pvt. Ltd., and HDFC Bank Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. HDFC Securities Ltd. is the syndicate member.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs.235.00– Rs. 22415.20 per share between May 2022, and November 2024. It has also issued bonus shares in the ratio of 867 for 1 in August 2024. The average cost of acquisition of shares by the promoters is Rs. NA, Rs. 6.07, and Rs. 28.57 per share. 

Post-IPO, its current paid-up equity capital of Rs. 988.84 cr. will stand enhanced to Rs. 1108.00 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 26037.80 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/- (loss) of Rs. 0.00 cr. / Rs. – (1.09) cr. (FY22), Rs. 355.99 cr. / Rs. – (0.01) cr. (FY23), and Rs. 570.12 cr. / Rs. 86.54 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 85.89 cr. on a total income of Rs. 476.15 cr., against Rs. 33.70 cr. / Rs. 380.65 cr. respectively for the corresponding previous period. Thus, while its top line marked growth, it turned the corner and its bottom line boosted from FY24 onwards.

For the last three fiscals, the company has posted an average EPS of Rs. 0.45 and an average RoNW of 3.75%. The issue is priced at a P/BV of 11.40 based on its NAV of Rs. 20.61 as of December 31, 2024, and at a P/BV of 12.78 based on its post-IPO NAV of Rs. 18.39 per share (at the upper cap). 

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 228.16. Based on FY24 earnings, the P/E stands at 301.28. Thus, the issue is exorbitantly priced. 

The company reported PAT margins of NA% (FY22), - (0.02) % (FY23), 15.18% (FY24), 18.04% (9M-FY25), and RoCE margins of NA%, 5.26%, 8.39%, 9.58% for the referred periods, respectively. 

According to the management, considering the track records of the promoters’ group, it is poised for bright prospects ahead and holds promises for the future performance. Post reduction in its borrowed funds, resultant savings in finance cost will reflect improved earnings post IPO. 

DIVIDEND POLICY:
The company has paid 386.20% dividend for FY23, and 2900% for FY24. It has already adopted a dividend policy in October 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Adani Ports, JSW Infra., as their listed peers. They are trading at a P/E of 26.4, and 40.3 (as of May 22, 2025). However, they are not truly comparable on an apple-to-apple basis. For the information of investors, parent company Aegis Logistics is trading at a P/E of around 53.0 as of the said date.

MERCHANT BANKER’S TRACK RECORD:
The five BRLMs associated with the offer have handled 79 pubic issues in the past three fiscals, out of which 20 issues closed below the offer price on the listing date.